PRESENTATION ON
INTERNATIONAL TRADE
INTERNATIONAL TRADE
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a)
b)
c)
d)
Meaning of International Trade
Reasons for International •
Trade •
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Importance of International Trade
International trade between various nations is an essential factor that is responsible for the increase
in the standard of living, creating employment, and empowering consumers to enjoy different kinds of
goods. Few other important factors that are influenced by international trade are:
Utilisation of raw materials: Some countries are naturally blessed with an abundance of raw
materials, like Qatar is for oil, Iceland for metals and fish, etc. Without international trade, these
countries would never benefit from their natural resources or raw materials.
Greater choice for consumers:More international trade results in more choices of products.
Specialisation and economies of scale – greater efficiency: This means that it does not matter
what a country is specialised in, and the essential thing is to pursue a specialisation that allows
companies to make a profit that outweighs most of the other factors.
Global growth and economic development: International trade influences the economic growth
of a country. This increase also leads to the reduction of poverty levels.
Difference between Domestic and International Trade
PA R A M E T E R S D O M E ST IC T R A D E IN T E R N AT IO N AL T R A D E
Nationality of buyers and sellers Under this, people of one nation work in their respective Under this, people from different nations work in the
domestic market. international market.
Nationality of other stakeholders Stakeholders like suppliers, producers, employees, Stakeholders like suppliers, producers, employees,
middlemen, etc., are of the same nation. middlemen, etc., are of different nations.
Mobility of factors of production Factors of production like capital and labour are mobile Factors of production like capital and labour are mobile
across one nation. across the different nations.
Heterogeneous customers Usually, customers are homogeneous in the domestic Customers are not homogeneous in the international
market. market due to different religion, caste, language, etc.
Risks Under this, a nation is subjected to the political risks This may be a barrier to international trade as different
within the nation. nations have different political risks.
Policies It is subjected to different policies and regulations, and It is subjected to different policies and regulations, and
laws of a single nation. laws of multiple nations.
Currency Only one currency is involved. There is involvement of more than one currency.
Export Trade •
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Import Trade
Import trade occurs A country imports
when a country that goods when it cannot
initially creates the manufacture the goods
goods transfers them or the other country
to another. lacks demand.
Entrepot Trade
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Elements •
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Here Are the Advantages of
International Trade
1. It provides a foundation for international
growth.
2. International trade improves financial
performance.
3. It spreads out the risk a brand and business
must assume.
4. International trade encourages market
competitiveness.
5. International exchange rates can be beneficial
to a business.
6. Revenue streams have some protection.
7. It can be used as a way to get around high
levels of domestic competition.
Here Are the Disadvantages of
International Trade
1. There is always a political risk involved with international trade.
2. There can be severe exchange rate risks.
3. International trade also presents cultural complications.
4. It has a credit risk that must be specifically managed.
5. International trade increases the risk of proprietary information theft.
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